Like all football clubs, PSG suffered from unsold seats for the less-popular games. Even when it was able to sell tickets for

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1 Case Studies, E. Thompson Research Note 2 January 2004 Paris Saint-Germain Football Club Scores With CRM Strategy French soccer club Paris Saint-Germain switched from mass marketing to more targeted customer relationship management. Our case study shows how this has boosted revenue, despite PSG's lack of success in recent seasons. Core Topic Customer Relationship Management: Creating Business Value for CRM Key Issue What is a CRM strategy, and how does it relate to and integrate with other enterprise business strategies, processes and operations? Paris Saint-Germain (PSG) is one of France's most popular football clubs, with strong brand name recognition within France. It was founded in 1970 and is owned by Vivendi Universal. It had revenue of 76 million euros in It employs over 100 people and is headquartered at the Parc des Princes in the center of Paris. Like all major French football clubs, revenue is generated primarily from ticket sales (35 percent), television rights (31 percent), sponsorships (21 percent) and merchandising (13 percent). Revenue needs to be secure to recruit the best players and then, hopefully, win more prize money from major European competitions like the UEFA Cup and Champions League. Recruiting the best players also increases merchandising, sponsorship and ticket sales. PSG last won the UEFA Cup Winner's Cup in Typical customers, the supporters, are young, male and under 35. Problem: PSG's customer base (its fans) received few advantages, other than access to a regular seat. Limited information was available on these customers, and what information there was could not be used to enhance their experience or drive additional revenue from the cross-selling of magazines, shirts and other merchandise. Previously, PSG focused only on those supporters in its ticket sales and newsletter databases, and did not seek to expand this knowledge or capitalize on other supporter interactions. There were many different contact points for tickets, information, merchandising, catering, special events like music concerts (up to three a year), stadium tours and other services. Like all football clubs, PSG suffered from unsold seats for the less-popular games. Even when it was able to sell tickets for Gartner Entire contents 2004 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 these games, there was the high cost of advertising through mass-media channels such as radio. It was also missing out on potential revenue from cross-selling magazines, shirts and other merchandise to supporters. Objective: Customer Relationship Management Vision PSG's overall vision is to become a European football superclub with a fan base to challenge those of Real Madrid, Juventus and Manchester United. To gain the financial strength that these superclubs have means developing revenue streams that are less dependent on winning football matches. To aid this corporate vision, the customer relationship management (CRM) vision is to personalize the relationship between the football club and its supporters. The objectives were originally set in 2000, when PSG was doing well. These objectives were to increase revenue through more ticket sales and greater merchandising. As PSG has not performed as well in the more lucrative European championships since 2000, the focus has shifted toward maintaining revenue, rather than growing it. The aims have been altered to focus on increased supporter satisfaction and loyalty, and in reducing numbers of unsold tickets for each game. Approach: PSG's approach can be summarized using Gartner's Eight Building Blocks of CRM Framework (see "The Eight Building Blocks of CRM"). Customer Relationship Management Strategy PSG set out a CRM strategy as a phased plan, with specific aims for each of its four phases. Phase 1 Simplify, improve and expand customer service. To achieve this, PSG consolidated its customer service activities. For example, it cut multiple phone numbers down to a single 0800 number for ticket purchasing and game information. PSG also introduced standard consumer service processes and application functionality in its call center, which took three months. At the same time, it expanded the number of outlets for its shops and ticket offices, including a store on the Champs-Elysees. Phase 2 Improve customer loyalty. PSG created the first French football supporters loyalty card called "Esprit Club." It took three months to develop the processes to handle loyalty point accountancy. 2 January

3 Phase 3 Extend the depth and breadth of business-to-business relationships. PSG focused on improving the sales processes to handle business-to-business relationships, for example, with sponsorships. This also took three months. Phase 4 Reduce delivery channel costs. PSG created a new subscriptions system for its newsletter, which included integration to its financial systems. This took five months. Further data mining and segmentation of the Esprit Club membership database is planned, with the possible introduction of a "smart card" in There are also plans for the implementation of more marketing applications in 2004, to attract other brands into the loyalty scheme. CRM Processes To make access to customer information easier, the sales and marketing processes were reorganized. Until then, there had been little opportunity for good customer relationship practices, due to lack of common customer information and poor synergy between the different departments at the club. Organizational Collaboration Employees experienced three major organizational changes as a result of the CRM program. A shift in the culture toward a common interest in the supporter and a common set of service standards A move from being product oriented (tickets, season tickets, shirts, merchandise and catering) to being customer focused The adoption of new IT PSG management restructured several departments into one service organization, trained its staff and had a strong communication plan. Management communicated its desire to achieve a high level of customer satisfaction and to develop a long-term strategy, instead of season-by-season activity planning. It introduced a single call center for all activities, such as ticketing, match information and loyalty program information. To make this a reality, it required close departmental collaboration to share customer activity-based knowledge from both the front and back office. The single call center allowed 2 January

4 individuals to share best business practices and common objectives for the development of the Esprit Club. It also allowed employees to switch the focus from the single contact type to focus on customer satisfaction. Management benefited from being able to monitor campaign effectiveness more accurately, due to more inter-departmental collaboration. CRM Technology The PSG information system was disparate, with separate databases for the different service, sales and marketing activities. PSG chose Oracle E-Business to support its CRM strategy and planning, including the launch of the Esprit Club loyalty card for the 2001 to 2002 football season. A new, centralized IT department was created for the first time to handle the project. Prior to this, each department was using its own tools, like spreadsheets or custom-built applications. Working on a common IT project resulted in major technical and organizational changes for PSG's IT support services. Transformation of Data to Applied Insight PSG's committed focus on gathering and analyzing data about supporters has meant that it has been able to move from only having knowledge of 20,000 newsletter subscribers and limited information from its ticket sales information. It now has more detailed information on 80,000 active loyalty program members and 40,000 other known regular supporters. PSG wishes to increase its customer database, with details on over 120,000 supporters, to 300,000 by This will expand its target audience for merchandising and less-popular tickets. Eight percent of Esprit cardholders do not live in France, so expansion looks eminently possible. Customer data quality and maintenance were critical success factors for the initiative. When merging the different departmental databases, such as accounting and marketing, there were many duplicate customer records, and basic details like addresses and telephone numbers were incorrect. Now there is a single view of the customer and a single contact history, regardless of touchpoint. Regular analytical reports provide enrollment and sales statistics for each campaign, segment, product or communication channel. These are relayed to all departments so that each employee can see the progress of the CRM program. The club used the data analysis tool to run specific campaigns per segment, selecting the best target, product and media for each special offer. 2 January

5 Customer Experience PSG is enhancing the supporter experience by: Communicating more with supporters. It handles 250,000 calls per year in the contact center. Spending more time with its supporters at the contact center. Answering questions more efficiently and more rapidly. Sending more outbound messages specific to each supporter's interests. The feedback from supporters has been excellent. They particularly like the more personalized relationship with the club, as call center agents know more about the caller. High-demand tickets for matches like the popular PSG vs. Marseilles game are sold first to Esprit cardholders. Cup tickets are offered first to Esprit cardholders who are also season ticket holders. They can buy tickets through the Web site or from the dedicated supporter call center. For less-desirable tickets, fans are contacted mostly by text messages and , and are offered them at a special price up to two weeks before a match. Customer-Centered Metrics About 80,000 supporters now own Esprit Club cards and the rate of acquisition is between 3,000 to 5,000 new cardholders each month. PSG can evaluate the supporter's current and potential value by supporter type, age, gender and location. It does this by looking at season ticket uptake rates, merchandise purchase rates and likely average age of defection (35). The use of 18 targeted marketing campaigns in 2002 and 2003 mainly through s and text messages to keep costs down have, so far, yielded additional revenue in the form of more than 500,000 extra tickets sold, and more sales of merchandise and discounted tickets. Each campaign has been profitable. When the club targeted the young adult market with the launch of a new magazine, the club received a 10 percent subscription rate, compared with the 1 percent rate it received in the past. PSG is running fewer mass-marketing campaigns, and is therefore spending less on radio and other forms of advertising, which has reduced costs by 40,000 euros. Average annual spend per Esprit Club member has increased by 66 percent for merchandising. The price of the average game ticket sold has increased by 80 percent. During the same one-year period, those figures remained flat for nonmembers. Results: Revenue from supporters increased by 500,000 euros because of more cross-selling and up-selling of tickets and 2 January

6 merchandise. Average price per ticket has increased by 30 percent through filling empty seats. Merchandise sales from PSG shops have also increased by over 30 percent. There was a ten-fold increase in response to certain marketing campaigns. Marketing costs were reduced by approximately 40,000 euros through the elimination of paper mail shots. Costs reduced by a further 40,000 euros due to reduced radio and newspaper advertising spend. Sales through the Internet have doubled although the cost per transaction through retailers is similar. Contact with supporters has increased at the call center and customer satisfaction has risen, as supporters are now able to call one number to gain access to all services. Moreover, PSG has won and renewed sponsorship deals as a result of its "proven professionalism" in introducing the Esprit loyalty card. Critical Success Factors/Lessons Learned: Never underestimate the initial effort required for data quality maintenance. PSG spent a lot of time merging databases with customer information and then cleaning the data up so that marketing campaigns would be effective. Short project iterations are better than a single, sweeping change. PSG took a phased approach. It started by consolidating its customer service functions into one organization first, before creating a customer loyalty card and improving corporate sales. Measure and communicate progress and success at each step, and have a break before making other major changes. PSG's phased approach was designed to let the organization absorb one set of changes at a time, so as not to overload individuals and to garner support from club employees. Brand loyalty is not enough to ensure a successful business, even in such a passionate industry as football. Bottom Line: Paris Saint-Germain football club has used customer relationship management to reduce its marketing costs, and increased sales of tickets and merchandise. Despite the club's poor performance in recent major competitions, it has added nearly 600,000 euros to its revenue. Acronym Key CRM PSG UEFA customer relationship management Paris Saint-Germain Union des Associations Europeennes de Football 2 January